Brazilian property sector growth 'above pre-recession levels'
Date added: 29th June, 2011 at 10:26
(view all articles from June, 2011)
Categories: Economy, Property News
The Brazilian property sector has grown above pre-recession levels, as the country's economy continues to recover from the worldwide crisis.
Research associate at the Center for Economic and Policy Research in Washington Rachel Ray wrote in an article for Monthly Review that real estate saw only modest declines during the global financial downturn.
In the recession, the sector shrank 1.5 per cent but it has since grown to be 3.9 per cent above its pre-crisis levels.
It saw annualised growth of around one per cent in the first quarter of 2011, she wrote, expanding by 1.9 per cent over the past year.
The expert also noted that the country's economy is continuing to enlarge, with gross domestic product (GDP) up 4.2 per cent over the last four quarters.
In the first three months of this year, its annualised rate of expansion was recorded at 5.4 per cent.
The economy has recovered very quickly since it contracted by six per cent during the recession, Ms Ray stated.
She noted that after the first three months of 2009, GDP expanded rapidly over the course of a year, with the third quarter of 2009 seeing a growth rate of 10.8 per cent.
According to the nation's official office for geography and statistics (IBGE), the economy was 4.2 per cent larger in the first quarter of 2011 compared with the same period in 2010.
Its accumulated growth rate over the 12 months leading to the end of March was 6.2 per cent.
Investment in the country also rose in the opening quarter of 2011, with real estate and renting activities seeing a 0.2 per cent increase, the IBGE reported.
Ms Ray argued that the two biggest drivers of economic growth in the first three months of the year were consumerism and manufacturing, although the recovery has been "heavily concentrated in the service sector", including the Brazilian property market.
The two industries that have seen the strongest expansion since the recession are finance and minerals extraction, the specialist stated, while the biggest growth areas within the service industry have been insurance and financial intermediation.
Meanwhile, private consumption in the country, which was barely affected by the global downturn - shrinking by 1.9 per cent over one quarter - has expanded at double the speed of public spending at an average annualised rate of 6.5 per cent.
Indeed, the IBGE noted that retail sales saw an accumulated growth of 9.5 per cent over the 12 months leading to the end of April this year and nominal revenue was up 13.7 per cent over the same period.
Private consumption may also be being spurred by the decreasing rate of unemployment in Brazil, which was at 6.4 per cent in May 2011, down from 7.5 per cent at the same time in 2010.
In the 12 months leading to the end of May, income rose by four per cent, which could be driving the increase of wealth among the country's population, with many experts recently highlighting the significant movement of people into the middle class demographic.
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